Michigan Legislature starts passing budget plans

By DAVID EGGERT, Associated Press

Wednesday, April 24, 2013

LANSING, Mich. (AP) — Lawmakers set the table Wednesday for how to spend $48 billion in the next Michigan budget, with big disputes to be resolved next month over expanding Medicaid, boosting road maintenance, giving tax credits to Hollywood for movie-making and laying off public-assistance workers.

Two spending bills — one for education and another for the rest of state government — won approval primarily along party lines from the Republican-led House. The GOP-controlled Senate, meanwhile, was passing about half of its plan, which was broken up into smaller pieces of legislation.

As expected, the House decided against allocating an additional $1.2 billion for the worsening transportation system because legislators have not agreed to tax or fee increases to pay for it. A budget bill approved 59-51 doesn’t provide any provision for making 320,000 more residents eligible for Medicaid health insurance in 2014, despite a push from Republican Gov. Rick Snyder and Democrats that it be included.

“We’ve miscast this as a political question rather than as a math question,” Rep. Jeff Irwin, an Ann Arbor Democrat, said of Medicaid expansion.

But Republicans countered that their spending plan is prudent and careful.

“It is based in reality. It doesn’t spend money we don’t have. It doesn’t make promise we can’t keep,” said Rep. Al Pscholka, a Stevensville Republican.

Perhaps the biggest unknown moving forward is Medicaid expansion because — if Snyder cannot bring fellow Republicans into his corner — about $100 million in Medicaid savings he would use for other spending will be rejected throughout the budget.

The federal government would cover the entire cost of new Medicaid enrollees for three years, phasing down to 90 percent in 2020 and after. The state initially would save $200 million a year because more people receiving mental health services and medical care with state aid would instead be covered with federal money. Snyder proposes tucking away half of the savings, so Michigan effectively would not owe anything for covering more people until 2035.

Republicans — over Democrats’ objections that education funding is too low — are on board with Snyder’s overall 2 percent increase in state aid to K-12 schools, universities and community colleges. They differ, though, on whether to devote most of the increase for school districts in the form of a per-student funding increase or to pay down school employees’ retirements costs.

Another fight is brewing over tax incentives for film makers, which are capped at no more than $50 million in the current budget.

Snyder and the Senate hope to set aside $25 million for the program, while the House is looking to eliminate it and spend the money on road maintenance. Snyder has struggled so far to get support for $1.2 billion in increased fuel taxes and license plate fees for crumbling roads and bridges, and some in the GOP have begun looking to find the money by cutting film incentives and the state’s fund used to attract business investment.

The House budget approved Wednesday would set aside $50 million for roads and specify that another $150 million in savings at the end of the 2013-14 budget go into the transportation account.